AT&T's new Sponsored Data plans are a very bad thing

At CES this year, AT&T made an announcement that is designed to make things easier on your wallet. The single biggest cost in any cellular contract these days is data, and AT&T's new Sponsored Data is being touted as a way to take some of the load off of your data plan and transfer that burden to person whose data you're downloading.

It's called Sponsored Data, and it's designed to break the internet.

Your data, their data, all data

The basic form for the vast majority of internet delivery systems is this: you pay for the traffic that happens between your device and the web. Simplistically speaking, if I download a movie from iTunes, Apple pays for the bandwidth it takes to upload that movie from their servers to their internet service provider's server. It's shuttled through a network of servers that form the backbone of the internet until it reaches my ISP, and the I pay for the download of that movie from my ISP's server to my device.

That's a simplified explanation, yes, but that's how it works. It works that way with your wired connection at home or the office and it works that way with your cellphone. Until now.

Carriers like AT&T and Verizon have long publicly alluded to their wishes to move beyond simply serving as just the courier of your bits and bytes and to take a more active role in managing that. The most sinister of these incarnations has carriers charging providers for priority access to their network — Netflix could pay for higher-speed deliveries to your device, for example.

This flies in the face of the principle of net neutrality. It's a principle in name only, as very few ISPs or carriers have signaled their support for net neutrality — in which all traffic is treated equally, regardless of source or destination.

Sponsored Data is designed to massively and rapidly undermine net neutrality principles

AT&T's Sponsored Data is designed to massively and rapidly undermine such principles, in a way that they'll never be able to undo. They've already signed on three relatively low-level sponsors: insurance provider United Health Group, mobile advertiser Aquto who plans to use the data they're paying for to distribute "long-format product infomercials" (greaaaaat), and business app provider Kony Solutions. They're starting small with these sponsors.

Or at least "sponsors" is what AT&T likes to call them. It makes the scheme sound less like a scheme and more like some charitable action. In reality they're "subsidizers."

In the past the carriers explained their desire to move towards a provider-paid model as a reason to help with the load their networks were under. This argument never held much water, as they were always turning a profit off the backs of their paying contract customers. They've rarely been hurting for cash, and today with expansive LTE deployments it's rare that a network has buckled under the load.

AT&T and Verizon have become more transparent about their desire to implement provider-pay plans: it's all a revenue play. I can't blame them for that — the carriers are corporations, and corporations exist to make money. Generally a corporation that would be willing to pay for sponsored data is a corporation that could afford to pay, and can afford to pay in large quantities. AT&T would love to have those dollars. The three launch subsidizers had individually-negotiated contracts with AT&T with what is stated to have been different rates for each. What those rates are, AT&T was understandably not willing to disclose, but it's safe to imagine that they've paid a tidy sum for the privilege.

All aboard

It's safe to say that Verizon will follow suit; Sprint and T-Mobile will feel the pressure too

It's also safe to say that Verizon is going to follow with their own similar plan very soon. That's usually how it goes with those two. Even with their unlimited plans Sprint and T-Mobile will feel the pressure — paying for unlimited data is nice, but having unlimited data that's being subsidized elsewhere is even easier on the wallet.

That pressure will come from a simple reason: if customers can get away with paying for less data on one carrier for the same downloads than they would on another carrier, they're more likely to opt for the cheaper one (after narrowing down their choices based on coverage, of course). Cheaper service attached to a recognizable name brand

The short-lived war that will kick off between the carriers will be nothing compared to the rush that the content providers will feel. Let's take Netflix as another example — if they sign on to Sponsored Data, meaning that customers will be able to stream as many movies and TV shows as they want from the service without worrying about their data overages — it's all but assured that their competitors will follow suit. Amazon, Apple, Hulu, CinemaNow, and everybody else will be sure to follow them down the path, lest consumers make their subscription choices based on who will or won't impact their data plan.

AT&T's been very smart about it. Instead of opting for a speed-based subsidization that would surely irritate customers — when your streams are jittering you're sure to first blame the carrier, not the phone or Netflix. It also puts a huge onus on the content providers to sign up. Savvy customers will know and use the services that won't impact their data plan, while it's certain that through the magic of advertising big providers will make a point of loudly declaring their status as Sponsored Data partners.

Pay to Play

Sponsored Data also has great potential to hamper smaller players that don't have the financial means to negotiate a rate with AT&T, let alone pay for that rate. The internet has enormous economic potential right now, and will only become more so in the years to come. Today businesses big and small launch on the internet. They can't necessarily afford advertising, let alone paying for not just their internet access but the internet access of their customers.

Small players will face issues convincing customers to use the smaller allotment of data that they are paying for on their service. It creates a barrier of entry for new data-hungry internet services that are oriented towards mobile users. The beauty of the internet is that any service can explode, that all players stand on a level playing field. Take Instagram, for example. They've likely transferred hundreds of terabytes of data to and from users. Let's say AT&T gave them a sweetheart deal of 50% off — they'd still be looking at thousands of dollars per terabyte.

Cheapskates

AT&T comes out as the big winner here. And mostly it's because we Americans are cheapskates. The vast majority of people don't grasp the costs that come with a web-based operation. They don't have any concept that they can relate to for the costs of web hosting and bandwidth. Then again, most don't work the financial side of any business.

What we care about is how much something will cost us here and now. It's why we have subsidized smartphones, wherein a $600 smartphone only costs us $200 or less upfront. We tend not to calculate the long-term costs of anything we do (I could go on another thousand-word diatribe about that too, but that's for another time), and our cellular carrier know and embrace that fact.

When we're told that we'll be charged less for data on AT&T, we'll be happy to pay less.

So when we're told that we'll be charged for less data on AT&T, we'll be happy to pay less. We don't think about the consequences of turning the level playing field of the internet into a wall that requires stacks of money to surmount. We don't think about how patently bizarre this arrangement is in comparison to everything else we do — Target doesn't pay for my gas when I drive to their store.

We don't think about how these costs will in the end be pushed back to us anyway. But it won't be so clear as before, where we paid for an allotment of data and got data in return. Now instead of paying for data we'll see that cost rolled into that of the services we access with said data. That might mean some services will charge more, but, again, we're cheapskates and have repeatedly demonstrated a preference for free services, or at least services that hook us with a free beginning. So we'll be badgered with even more ads and more in-app purchases. There we are again with that not looking at the long-term costs.

And AT&T will never be able to walk this back. Once providers begin to sign on and customers get used the upfront savings on their data plan, there'll be no way to undo the damage. We don't like paying more for things than we had to in the past, even if the costs have changed. Once data plan charges start dropping thanks to Sponsored Data, customers won't react kindly to services that opt to stop paying for their data, or to a carrier undoing the Sponsored Data scheme.

AT&T's made good on their threats to gain more revenue by offering priority access to those internet services that are willing to pay, and in doing so they're threatening to forever alter the landscape of the internet.

Reader comments

AT&T's new Sponsored Data plans are a very bad thing

So wait, AndroidCentral, a site that concerns itself with mobile and specifically with Google, is ranting about a sponsorship business model. Oh...I see, you've got to have money to run this enterprise don't you? Maybe that's why we see those ads for the latest phones, or cheap fares to Europe on the sides of the page, or sprinkled among the righteous comments.

Hmmm, wait, wait...EGADS! Isn't it those same evil companies AT&T and Verizon that are paying you for those ads???!!! Oh, and doesn't our wonderful government make the carriers pay billions of dollars for spectrum before they can even put up a single tower and charge a single cent? Oh yeah, by the way, aren't some of those big bad corporations the same ones that directly or indirectly provide our paychecks? When did the average American consumer become so blind to the bigger picture and balanced view?

I really don't care, if Hulu or Netflix wants to pay for the data for me to watch their movies on my device, so be it. Works for me. I can see if there was a problem if AT&T or whomever was blocking websites that would be wrong. I'm also quite sure if Sprint or T-Mobile thought of this, very few here would complain. And I did read somewhere that T-Mobile is working on some data access deal where you can access Facebook.

Many here are so fanboys and can't stand that others who choose a different option may benefit.

I guess I still just don't get it. Why does data cost anything? I think its all BS, yes, the servers, wires, towers all cost money to build/implement and maintain, so yes we should pay a fee for the ISP's to keep them running. But the actual sending of data I think it a crock, once those things are in place and running, whether the servers, towers and wires are moving data or not, they are on and the cost is only the power and maintenance of them. I call BS as I don't think the actual "data" itself costs anything. Like the stock market its a made up way to make money in my eyes. Now I admit I'm not all knowing, and niave about many things and there is likely something I'm missing. But I still don't understand if the equipment that transfers and sends the data is on whether its being used or not, why does the actual data, which is not a physical tangible item, cost anything. It doesn't, but somebody came up with a way to make money on it because they could measure it. I hate greedy corporations and governments. We need to discover a new continent again and move.

I see a lot of p****d-**f people here, but seriously, how many will actually write to their congress man, governors and to the FTC ? A rant on a Tech gadget lover's Forum doesn't carry much influence with lawmakers.

I understand some of the fears honestly. At the same time though, Didn't people say data prices should start falling soon? If that is the case, it won't matter much anyway. I don't have much faith in the carriers to pass on these savings ASAP, but there is no way prices stay where they are. Think about what how big 2GBs of data seemed just 6 years ago. Add that to the fact that WiFi hotspots will become more prevalent. Cities want to cover their streets with them. Cellular data will become less prevalent even if it is faster at times.

This is exactly why the FCC gets our federal tax dollars. If they don't intervene here, they are showing themselves to be completely worthless. This is absolutely an abusive, double-dipping policy for ATT that is going to do nothing but help their profits while (possibly irreparably) damaging net neutrality.

Derek, Target doesn't pay your gas money to shop at their store....but P&G, Energizer and all the other major brands do. It's called promotions and coupons. It's been this way in retail for decades. This is absolutely no different. While I also see this boomeranging back to a double dip against my wallet this is just AT&T playing catch up. Hardly anything new or different. Heck, AOL was built on this model and all that did was bring about the intro of the Internet to everyone's grandparents and result in the birth of the ISP business.

This is inevitable. I'd be more concerned about the collapse of SLA's. When the content is subsidized, you can't really complain when it's not delivered perfectly. That and I'm sure all these sponsors will require submission of more of your private info to grant access. Especially (gasp) permission to use your phone data to deliver "value added services." Takes Play Store permissions to a whole new level when you agree to let the sponsor look at your phone data while accessing their infomercials.

Same old story! They get you with upfront low costs and the consumer ends up paying more for content. Remember the 99cent cellphones in the mid 90s? But then you would pay 1 dollar a minute? Well att is bringing back the same concept in a different form and slapping on a friendly name "sponsored" data! Oh thanks! So because content providers like netflix will have to pay att money to push data on their network, att is going to lower data rates for us! But wait, the content provider will have to raise premiums to account for this new cost of operation. Att gains revenue, and ultimately costs their customers more money in the end. And att shakes the very foundation that makes the internet so great, anyone with a great idea that is innovative and developed well has a chance to provide users with great applications or content, and they can do this from basically nothing but an idea like those guys who created this company called Google, ever heard of them? Well, kiss success stories like that goodbye if att succeeds, regular people can't afford to "sponsor" data. This could be the end to independent development and everything Google created for developers and dreamers with their free development tools and servers to upload web apps like Google app engine. Consumers pay more, independent developers with great ideas will become extinct. This has to be stopped! The only winners here are att. Something has to be done.

Yeah, the data plans will drop, but the amount of development will as well. The consumers pay in the end, always! You will pay less for the data ; ) but companies like netflix and hulu+ will never compromise their revenue. Content providers will charge higher premiums to the consumer to balance the new cost of operation. And the worst part about this, facebook will have to charge for membership. The free social networks and the very forums we are dropping opinions on will all have to implement membership fees, and they won't be cheap! Facebook users combined use millions of terabytes a day. Free social networks, blogs and forums will have no choice but to charge a fee. In the main scheme of things, is the way things are really that bad? Not in my opinion. I pay 50/month for unlimited data and it is just fine. I would rather pay 100/month and have free reign of content providers at low prices, and all the services/networks being free for me to use, then pay 1/month and be completely limited to what I can do or use on my tablet or smartphone. Sure! 1/month sounds great and the unintelligent consumers will bite like they always do. But then they will pay more a month in app/content provider services then the current data plans carriers provide. I have 175 applications on my nexus 7 2013, if att is successful, I would end up paying way more to maintain my library of applications. Basically I pay 50/m now, if this takes effect, I will reach the 50/m total from content providers with just 10% of my apps. The rates att is offering are outrageous, kiss netflix at 7.99 a month goodbye! Let's try 40/m and that is a minimum estimate, that's just one provider. Still want to be sarcastic? Its a bait and switch, if att was really trying to help the internet neutrality, they would just sponsor the data themselves, instead what they are doing is gaining profit from content providers and looking like heroes by dropping the data rates, meanwhile the content providers will hike the prices. And in the end, the consumer loses badly! I love all the apps on my tablet 90% being free, I don't want to lose them because they have to spend x amount of dollars to continue to operate, even if each app was only 1 dollar, I'm paying 175/m instead of 50/m so in order for me to break even I would have to cut 125 apps from my tablet. That's just on the theory of 1/app, do you see how we will pay even more because of this? And how att needs to be stopped? O, and I happen to be a developer, and I can't afford to sponsor data, since I'm not established yet. Meaning all independent developers like the guy named mark who created facebook wouldn't have been able to do what he did without net neutrality, Google wouldn't exist either, something to ponder?

Posted via my nexus 7 2013 (created by a company that wouldn't exist without net neutrality)

Yes. Sorry, I don't see the sky falling here. It's a nice scheme by AT&T to try and get paid twice for the same data, since most probably wouldn't lower their data package to be inline with this "sponsored" data.

But content providers aren't going to raise their rates so that AT&T can lower theirs. Why on earth would they do something that silly? And without content provider buy-in, the scheme won't in any way transform anything.

The funny thing I ran into someone at work who is working on sponsored data and first question I had was about net neutrality. The guy kept dodging the question with the same speech of equal speed garbage. Let's just say I didn't agree in anyway. I'm so looking forward to an internet controlled same way as newspapers and TV (sarcasm). I hate to say something like this was bound to happen to the internet eventually whether it was Version (who has never hidden its hatred of net neutrality), foreign governments (who hate it too), Microsoft, Viacom and the list goes on and on. So in some ways congrats on At&t for figuring out how to hide the truth in the word "savings" while making some coin along the way just the way they did when the "invented" the two year contract... The only way to stop it now would be a mass boycott by the worlds largest companies on the internet, but one will cave first (my guess would be bing or yahoo) and the rest will follow.

And believe me, this will blow up in their faces.... for this to work all the carriers have to adopt this model and I can tell you one that wont... T-Mobile if they carry true to the "uncarrier" model....

Honestly I don't see this as any different from rewards programs. My grocery store has a gas station. Shop enough and you get discounts on gas. So yes in a way they are paying for my fuel to get there. I buy groceries I was going to buy anyway and I get cheaper fuel. Not free fuel mind you but I had $1.20 off PER GALLON last time I filled up and my tank is 30 gallons. That's a pretty big reward.

Stores embrace rewards programs to promote loyalty. This is just another way to do it.

As a small business owner myself I can see how it sucks but we're already facing off against the big players. Our value proposition cannot and never will be price. We have to try to make our service or product worth the extra cost to acquire, even if that cost is bits of data.

I read with amazement and disgust as the global warming and "we need more government" low-information voters come out and complain. It is the government that got us into this mess and creative business people will always look for a way around the business/innovation stifling regulations. First off this service is not about net neutrality, and second NOT ALL PACKETS ARE CREATED EQUAL.

The principle of net neutrality should be that no carrier will impede access or the flow of any traffic to any other device or address as long as it is lawful traffic. This does not and should not mean that all traffic is degraded to being equal best-effort traffic. If we do not acknowledge the fact that not all packets are created equal then our overall Internet experience will be lousy just like our healthcare is going in the United States. Video, voice, e-mail, web browsing, financial transactions, and other services have different needs with respect to bandwidth, latency, and jitter. Voice traffic whether it is VoIP, Skype, or Comcast Digital Voice should be treated differently than someone searching for Kim Kardashian pictures on Bing. The carriers have found a way around this problem by delivering their services "off-net" while the Vonage, Hulu+, Netflix, etc. are stuck with their traffic being treated the same as spam. These over-the-top (OTT) providers are at a disadvantage to the carriers because they cannot manage their quality of service. This is all done under the guise of net neutrality. So while you people are ranting for net neutrality, you are actually hurting the companies that you think you are supporting. Kinda like our current politics, eh?

I would love to pay my Internet and wireless service providers a few bucks a month extra so I could prioritize certain services delivered to me, but efforts to do that on the retail level are continuously thwarted by those egalitarians that believe everything in this would should be treated equal. I would love for Netflix or Vonage to offer me a service that would guarantee the same quality that a cable company could deliver. I'd gladly pay a buck or two a month extra because it would still be cheaper than the incumbent.

AT&T has creatively devised a way to provide that service within the current restrictive regulatory framework. If Vonage were to say that the quality of my VoIP would be the same as when using AT&T's voice service for an extra buck or two a month, I'd sign up and save my voice minutes or even cancel my voice plan. I think that this concept has potential to provide some real service competition down the road. I don't see the value for companies like United Healthcare to subscribe to this service, but I do see it as an opportunity to OTT service providers to level the playing field with incumbent carriers.

So to all of you socialists and statists that think that corporations like AT&T are evil and should be taken over by the government, quit buying the liberal propaganda and start thinking for yourselves. We wouldn't even have color TV and touchtone phones if it wasn't for private industry. The Internet would be a thing used only by the government, military, and its contractors. Forget about Google, Microsoft, Facebook, twitter, and all of the other things you take for granted if your government was calling the shots.

Derek got a few things right in the article. I agree that Americans are short-sighted and don't think about the long-term costs or implications of their decisions. Sponsored Data could go either way. It could be a boon for the OTT service providers as long as there are service guarantees that go along with it. It would be cheaper for a company like Hulu to buy in bulk from AT&T and pass a modest price increase to their customers versus the end-user paying more for it directly without any bulk purchasing power. On the other hand, it could end up where AT&T makes money on both ends of the transaction. This is unlikely since unlimited data went away at AT&T. Sponsored Data is more like an 800 service. 800 services were good for the consumer when long-distance wasn't free. All consumers could now call a company to use their product or service without paying the long-distance charges. It opened up catalog businesses like LL Bean. Now that long-distance is a thing of the past toll-free services are more of a convenience for a single simple number. Sponsored Data could do the same for smaller businesses.

If Derek, Phil, and AC should stick to straight reviews of Android products and regurgitating press releases. I don't come here for editorializing. If you want to provide balanced reporting, then come to someone like me that can provide an intelligent alternative point-of-view. AC should look at both sides of the issue before inciting more internet hatred from the uninformed.

Dude you aggravated me with that epilogue of "missed point" I'm not a socialist and F the government. I'm an independent developer and if att is successful I am removed from even getting a shot, just like every other independent developer. It's not a government and private organization thing. Its a corporate and small business thing...get it?

If that didn't catch you...facebook, google, you use their services? Well they grew to what they are now because they didn't have to pay for the data we use. You're advocating for something that will only benefit the established company that can afford the premiums. The entire foundation that Google is built on...yeah...out the window, google app engine will be gone and you will have less choices and you're forgetting the biggest thing...they always get you somewhere, in the end the consumer pays. The article we just read never brought government into it, you did! And you missed the entire point.

You like color TV? I like chromecast on my color HDTV! Chromecast created by Google, a company founded by poor people in a garage... Do your homework please. You missed the angle of businesses that don't exist yet and may never if this takes place. You missed the point that its not about att and vonage, its about the opportunity for new competition from ideas, not money! As an independent developer who isn't rich yet, I'm disgusted at you! You support something that kills my chances, can you really blame me for being angry with you? If you knew I was a very intelligent college grad with a degree that doesn't seem to matter and Google developer at night, burger flipper by day, working on an idea for the last 3 years that is about to be threatened because I definitely don't have the money to "sponsor" you're data! And don't get me started on the technical aspect of what you said about knowing "packet data" bs! netflix, hulu, both work good for me and its 7.99 a month, for once, can things just be left alone. The internet was the last chance at starting a business from nothing.

One last thing...I have to give you a chance before I completely decide you are wrong. You said you can give a balanced editorial. Well, if this isn't so bad, explain how it isn't bad after I made my point. I want to know if I brought forth a valid point in your eyes. And if you're as "balanced" as you say you are

I'm not surprised. We've been left for dead over there. I guess we should just be thankful they haven't shut the forums down yet.

The worst thing is two things happened with no warning:

1. webOS was removed from the top banner. No more linking to webOS Nation.

2. The updates just stopped. No warning, no apology or explination one day Derek just stopped. Then the other writers stopped. 7 months later we still have no news. No tips. No rumors. The info is out there, they just aren't updating the site.

-you buy an electric car, or a more fuel efficient car. Doing your part, right?
-you buy less/no gas a result. Conserve fossil fuels and put out less emissions. Great, sleeping better?
-but wait...state and federal taxes on gasoline purchases subsidizes 70% of road maintenance funds. Without everyone guzzling gas, and paying those sales taxes at pump, road budgets for interstate maintenance and repair dry up.
-but even though you produce less emissions, you STILL use those roads right? You need to help pay for that use! You are skirting the taxes.
-Answer: jack up sales tax at pump to further penalize gas guzzlers AND create a "road usage" tax of some kind or raise toll fees as applicable. But assign that new tax to everyone, and don't eliminate the old one.

See how this works? Then you can see the connection.

Global Warming is an issue. But taxation is all the government cares about "fixing." Follow the money.

If you said a smartphone is a toy for most people you might have an argument, but i've had way too many situations where i would have been royally screwed if I didn't have some kind of cell phone. Its far from a toy and I think most people would agree with me on that.
Of course if we all went back to basic cell phones then this whole article would be moot.

*mind blown* I seriously ignored all the sponsored data talk this week because I felt it didn't pertain to T-Mobile subscribers... Wrong! I feel like we're right in the beginning of the bad stuff that happened right before the matrix. This Is it

I'm not following this logic. Sponsored Data is nothing like a violation of Net Neutrality. With Sponsored Data, the consumers have choice. If you don't want to subsidize Netflix, who's paying for Sponsored Data, you can choose not to use their service. With Net Neutrality, the consumers wouldn't necessarily know who's getting preferential treatment, and they wouldn't have any control over whether they're data is being treated fairly by the carrier.

With Sponsored Data, Net Neutrality is preserved and you can choose to use the Netflix competitor and your packets will arrive just as quickly as the Netflix data packets.

A violation of Net Neutrality would mean that Netflix could, conceivably, pay AT&T enough to put a (for example) 100kbps throttle on traffic from Hulu. Thus, effectively, making Hulu unusable for AT&T customers - and without the customers being able to do anything about it. Probably without even knowing AT&T was the culprit. But, that is not what Sponsored Data does. It just moves the money around, but the consumers can still use any service they want and, thanks to Net Neutrality, they should all perform equally well.

And if Netflix makes my data plan cheaper, it just makes it easier for me to afford some other service besides Netflix.

It seems to me that the most likely result is that people might move to AT&T, IF the data plans really do get cheaper (which I doubt), and the extra data usage that results will, ultimately, drive up Netflix's cost to pay for Sponsored Data (because any reduction in data plans across the board ultimately has to be paid for by what AT&T collects from Netflix in Sponsored Data charges) to the point that Netflix will realize it was a stupid idea in the first place and they'll quit paying for Sponsored Data.

OR, AT&T data plans won't get any cheaper (which is what I think will REALLY happen) and nobody will change carriers and nobody will subscribe to Netflix (because of Sponsored Data - they'll subscribe the same as they would without SD) and, eventually Netflix will realize they're paying AT&T for nothing and quit. I mean, really, how many people REALLY care about trying to stream movies in locations where they don't have WiFi?

Either way, I predict Sponsored Data to be a fad that fades within 2 years.

Yes we do get it, I have no problems with this at all, if Netflix or whomever wants to foot the bill for the data stream to my device, I'm all for it. I guess some people are just so paranoid, or just don't like that somebody who doesn't choose the same carrier as they do get unlimited data and that this may level out any reason to switch.

No...you don't seem to understand the big picture. I'm annoyed with you. I'm annoyed with what I just read! You said about the consumer having choice? I'm a developer and I'm not rich or loaded with money, if I want to develop a new innovative movie app I won't be able to offer it to you or anyone because I can't afford to pay att for the data my users would consume, you will never see any new developments ever again from a person or small company. Facebook, instagram, google!!!!!!, would not exist if they had to pay for data when they first started! If att is successful you can kiss the one principle Google stands for goodbye! Don't be evil! This country was built on the idea that anyone could take an idea, start a business, and become very successful. Wal-mart killed the storefront small business aspect of this country, dumb cheap consumers bought their crap for less and put the local store that offered a higher quality product out of business, which created the recession, millions of lost jobs because of one winner and that winner named wal-mart paid minimum wage and the mudslide began. The internet is the last hope for the very foundation of the middle class. If att manages to fool the consumer (like they already did, you) the last chance for a regular person to start a business and play on an even playing field will be stripped! You argued the opposite point, right now, you as the consumer have the greatest choice platform their is. Everyday a new service is put out on the internet, maybe the next facebook, google, or netflix. We could be seeing the end of that. Capitalism destroyed this country.

Good grief. You're a developer?! Have you ever actually made any money at it?

I am a software developer. I left the corporate world and started my own company in '99 - and turned a good profit even in the first year.

If I wanted to start a streaming movie rental company to compete with Netflix, this Sponsored Data business wouldn't make a BIT of difference to me. In fact, I would be encouraged if Netflix bought into Sponsored Data. They would be increasing their costs, which helps me compete against them. And they would (in theory) be lowering the cost of data plans for my potential customers, which also helps me.

The economics of the situation dictate that, if Netflix buys Sponsored Data, their cost goes up $X per customer. Let's just imagine that X = $1. That means that, if they keep their pricing the same, their customers are paying them $8/mo, $1 of which goes directly to cover their Sponsored Data, so Netflix is only netting $7. If I do everything else just as well as Netflix, but don't pay for Sponsored Data, I can sell the same thing for $7/mo. And that means that all the consumers out there have a CHEAPER alternative that is just as good, as long as they only stream over WiFi.

That sounds like a consumer choice, which gives a CHEAPER alternative. And if the consumer happens to be on AT&T, and AT&T really does lower their data plan prices, then the consumer would have EXTRA MONEY every month to put towards streaming over cellular, IF THEY CHOOSE TO, while still paying less money overall compared to today's prices for Netflix and AT&T data.

And, finally, Walmart didn't kill mom and pop storefronts. American shoppers killed mom and pop storefronts. Saying Walmart killed them is like saying guns, all by themselves, kill people. They don't. The PEOPLE making the choice (to shoot someone or shop at Walmart) are the killers. Take some dadgum responsibility for yourself and your choices!

If you don't like Capitalism, there are plenty of Socialist countries out there that will be happy to have such a high quality (and business savvy!) software developer as yourself. And you're already used to being not rich or loaded with money, so it should be a perfect fit!

I'm so glad someone else on this forum has somewhat of a brain. You know what would fix this all? Government! Love me some REGULATIONS! (extreme sarcasm) ps... America is as capitalistic as my shoe. F*ck the government!

Well, I would like sponsored e-mail. Everyone who wants to send me an e-mail has to pay me 25 cents. When I get the e-mail, I have the ability to refund the 25 cents, which I will do for friends and they will do the same for me - but spammers MUST PAY.
Overnight spam would vanish as the same tech that makes bitcoins secure can be used for these 25 cent payments. If friends did not refund = no more from me, and vice versa.

If AT&T is doing this, Verizon will be very soon to follow. Sprint will likely try to keep up and be next. If those three go this way, its a guarantee that T-Mobile won't. Now we just have to hope T-Mobile can improve their network enough so we can all jump on the T-Mo ship.

Superb article. It's kind of like the internet is turning into cable tv. Only government, regulation, and laws can enforce net neutrality. Otherwise it will be the big boys with deep pockets who control the pipes.

The government turned cable into what it is today with its regulation. Don't be naive about what regulation really does, squash the tiny guy trying to start something new. Why do you have to pay for basic cable channels before anything else? Who let a handful of companies buy up most of the cable channels and then use those as a hammer to raise the retransmission price on the local channels? What about local governments taxing the piss out of companies for use of the easement for the wires? Cable companies are far from perfect but let's understand the whole problem first.

The government is the problem; not the answer. When will people wake up and realize that fact? Net neutrality has been bastardized into some egalitarian concept that is hurting OTT service providers like Vonage and Netflix. You need to accept the fact that all packets are not created equal. AT&T is trying to find a solution that can recoup their network investments because they realize that they will never be a content provider. Comcast is trying to stratal the fence and be both.

Those of us old enough to remember the 90s and who got to see the sheer number of tiny little one or two person outfits come blasting out of nowhere to great success can especially appreciate what a degradation of the internet it would be if a handful of megacorporations get to so directly control access, speeds, and prioritization of whose data comes through the fastest or the cheapest.

Only initiatives from the already-established or those who can get the blessing of venture capital from the altready-established will be able to afford the toll the AT&Ts of the world will charge in order to make their potential new service at all competitive with the already entrenched.

Wow this is just after I saw the clip mix of Fox coverage-denying of global warming. These people mean business and won't stop until they take control of every info.
Doomsday is around the corner brothers
Idiocracy is creeping in -
Soon enough Brawndo will be coming of out of our faucets.
Blue pill or red pill is our only choice.

They had to because people are too literal. Avg temp is rising gradually that's why it was labeled "warming"
That extreme winter weather is actually not opposed but in accordance with the problem.
I know quite a few scientists and did my homework too - it's real , call it however you want. But big money industry will use media to brainwash lazy and uneducated people as we all are at one point. That's what is scary.

Yes, I know it's getting warmer so it's getting colder. Like I said all bases are covered on this hoax. There are plenty of sciencetists on the other side also. We better stop buying phones takes quite a lot of fossil fuels to make them, ship them. Never mind your phone is probably made of hemp not oil.

Yep and just the energy consumption of internet itself is going through the roof.
We are where we are and nobody is going back to 15th century so the Q is - are there alternatives, what are the resources and how to utilize them .
Everything is there but corporate interests and economy structure as it is makes it impossible. Energy is the world's problem and can not be left in private profitable hands to be dealt with.
Just look at the resistance and argument against Tesla's AC in the US the early 20th century - Morgan backing Edison. It took years, decade to adopt it not to mention Morgan's reaction on free energy distribution proposed by Tesla "no meters no investments".
We need clean and efficient energy and solutions are kinda there but the problem is the costs that are artificial to begin with.

This is terrible for consumers in the long run, but to people who don't pay as much attention to the details as we smartphone blog reader types, it's going to look like carriers are giving them something useful for free. Unfortunately, I'll bet this proves to be popular with subscribers.

Well, ATT & Vzn are NOT catering to the consumer. Bills are higher with them, and you get less data. T-Mobile is only going to continue, and continue to grow, 50+ million by the 3rd qtr of this year is my theory. I just hope Tmo gets the 600mhz that the FCC will be auctioning off in the middle of 2015, they really need that spectrum.

Softbank has enough money to do anything they want, and Sprint has the spectrum, but its taking them forever to employ it. T-Mobile needs costumers more then any other U.S. carrier. They value there customers. Verizon and att don't care if you switch. Sprint needs customers to, they also need faster service (they're coverage isn't terrible). T-Mobile needs coverage more then speed.

This will be an interesting year for wireless, as long as T-Mobile keeps pushing these "uncarrier" moves. But with At&t and Verizon doing shit like this, Europe's market is looking awesome.

Your right, ATT & Vzn don't care about loosing customers as much as Sprint & Tmo. Sprint has tons, and tons of potential, their just moving way, way too slow with the Spark network. Look at what Tmo did with the $4bln they got from ATT, covered 200m with LTE in only 8mo's, where as Sprint says only 100m will be covered with Spark by the end of 2014 and Softbank is investing $20bln in Sprint, there is no reason Sprint can't be just as aggressive if not more aggressive than Tmo.

I have a feeling the 600mhz spectrum will cost between $7-$9bln, that is if it's nationwide. Verizon paid a whopping $9.3bln for the nationwide 700mhz licenses (I just Googled it), so that gives us an ides of what the 600mhz licenses will cost.

That is true that we need more competition, but our regulatory structure prevents true competition not to mention the cost of building these networks. Government regulation and intervention stifles competition. We have a chance to at least have some competition in content delivery but the net neutrality wonks keep ruining that parade. The carriers need some way to make a reasonable profit if we turn them into dump pipe providers.

Actually move to Canada. They have very good regulations that prevents companies from screwing everyone and everything. Canada wasn't even affected by the 2008 crash because of the regulatory system they have in place.

Their regulatory system is the Reason why Verizon backed out of trying to move into Canada when they found out they couldn't get away with all the BS they do here.

Here in England the national health service costs less to run per head of population and covers everyone, than the current commercially driven healthcare system in the US that leaves many with no cover at all.

I've been saying this for years but the FCC needs to start implementing heavier regulations against the Telecommunications industry instead of letting them make up the rules as they go along. We the citizens own the airwaves in the US which is leased by the FCC on our behalf to the carriers. Like Verizon, who didn't pay taxes for 3 years while making 30 billion a quarter.

It doesn't take that long to email your Representative, senator, and the FCC about this and complain. Please take 15 minutes out of your life to do so and tell your friends and family to do so as well.

And companies like United Health Group, Aquto, AND Kony NEED TO BE TOLD in no uncertain terms that they are FOOLS and TOOLS and working against the interests of their customers.

You need to email these people and tell them what a horrible idea this is. You need to tell these info-mercial people you aren't watching their crap even if they PAY you to watch it.

You need to send email to your congressmen that that Obamacare was never intended to enrich AT&T and United Health Group needs to be investigated for siphoning off funds from government mandated (and funded) health care dollars to pay AT&T.

This s extremely evil. If you don't use whatever service is sponsoring this crap you get screwed. It is a plan that will eventually lead to you the consumer paying more somewhere. Netflix goes up in price. Instagram caps your photos unless you pay for "Instagram Pro" Does Google pay to play on AT&T? This is so nefarious and onerous that everyone of us should be emailing not only AT&T but any of these sponsors and Congress. The point made in the article is extremely important about losing the ability to create new start-up or ideas as the cost will be astronomical. I see this as a play to control the internet. It will spread to the cable companies and other ISP. OK Mobile Nations now is the time to SCREAM LOUD LONG and HARD. Nip this in the bud or never see a free and open internet again. Infomercials?? WTF!!!!

Heres something else to think about. Once this is all in place, then all of a sudden the isp's will basically have complete censoring power over the internet. Even if everybody is on board and willing to pay for preferential bandwidth, ATT could go and refuse, say.... a blog titled "attsucksbigballs.com" for example, or even worse, start bidding wars between competitors... "sorry myspace, but friendster is paying twice as much to be here... your move"

What does the government and Obamacare have to do with this? This is a clueless comment. The government is already wasting billions of dollars pushing an idea that no one that is working and paying taxes wants that will end up lowering the quality of healthcare for all Americans. If we get the government out of telecommunications and healthcare then companies would find other ways to do what AT&T is trying to achieve. People don't understand that innovative people and companies will find ways around obstructionist regulations. Read my comment below and see how this could actually benefit the consumer and companies like Netflix.

Obamacare is a net loss, because a) its a government boondoggle, and more importantly B: at least ONE THIRD of the subscribers pay nothing. (low income)

Yet they are covered, funded by you and me and the treasury of the US.

So United Health Group (a medical provider, if that hadn't dawned on you) will be getting large sums of money, not JUST from people with private insurance, but ALSO from the US Treasury for all the low income people getting a free ride.

UHG will be paying AT&T to carry (god knows what) for their patients, at the expense of you and I, and all tax payers. You know damn well this will be a total write-off for them, AND they will bill the payer of last resort: The treasury.

The leaches come out of the wood work.

AT&T is trying to double dip. Oh sure, they claim it won't count against your bandwidth, but given how truthful and up front they have been with you for that last 20 years, do you REALLY mean to tell us you are gullible enough to believe that?

Are you REALLY expecting to see lower phone bills? (rolls eyes).
Do you REALLY want an internet that only corporate sponsors can enjoy?
How much MORE ads will Android Central have to cram on the page in order to pay AT&T to their content?

That's what i was thinking too, AT&T found a loophole to double dip. Like you said, with United Health Group being a medical provider, they will be getting large sums of money, not JUST from people with private insurance, but ALSO from the US Treasury for all the low income people getting a free ride. Because of this, medical groups shouldn't be allowed to be a "sponsor". Whether its a tax (or whatever) write off, I feel UHG is also double dipping.

BTW: I disagree with AC about Americans being cheapskates. Some of use are, but most Americans feel they are entitled to freebies. Big difference. Which is why we have such a problem with welfare. Our welfare system is why majority of Americans feel everything should be free.

But this fits into the net neutrality faux rules they were talking about. Traffic is all treated the same, just who pays for it is different. I think it's all hyperbole unless they start reducing data caps at the same time. If the most data you can get goes to a gig a month, then it's a problem.